Justice Department launches criminal probe at IRS

May. 15, 2013 - 06:00AM
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Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, called the agency's actions appalling and said the additional information requested was far too onerous. (Mike Morones / Staff)

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The IRS inspector general blamed “ineffective management” for the targeting of conservative groups seeking tax-exempt status by IRS employees in a report released late Tuesday.

In March 2010, IRS employees in Cincinnati began singling out groups seeking tax-exempt status, including groups with names including “Tea Party” or “Take Back the Country,” according to the report.

Over the next two years, the employees asked about 296 groups for additional documentation to qualify for tax-exempt status. The requested information included résumés for all personnel, the hours worked per employee, how their pay was determined, and a list of every employee or board member past or present.

Groups were also asked to provide copies of all board meeting minutes, all documents related to fundraising events and merchandise sales, and a listing of “all past activities,” including the percentage of funds that went toward each activity or program, according to IRS documents..

“The IRS used inappropriate criteria that identified for review Tea Party and other organizations applying for tax-exempt status based upon their names or policy positions instead of indications of potential political campaign intervention,” the report said. The average wait time for an application flagged by the IRS was 574 days, while the longest was 1,138 days, according to the report.

The inspector general recommended the IRS better document reasons certain cases are flagged for review, develop a process to track applications and train employees before each election cycle to avoid future problems.

In a response to the report, the IRS said the flagging of particular groups was meant to help cope with the more than doubling of applications from 2008 to 2012 and numerous referrals from watchdog groups that tax-exempt organizations were engaged in extensive political activity. The IRS also acknowledged that its requests for more information in some applications were “overly broad.”

The Justice Department and FBI have also launched a criminal investigation of Internal Revenue Service employees who allegedly targeted conservative groups seeking tax-exempt status, Attorney General Eric Holder said Tuesday.

“Those [actions] were I think — as everyone can agree — if not criminal, they were certainly outrageous and unacceptable,” Holder said at a news conference.

Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, called the agency’s actions appalling and said the additional information requested was far too onerous.

“IRS officials confirmed these flagged applications were essentially placed in a state of purgatory where they often languished without action for periods as long as two years,” Issa wrote in a letter sent Tuesday to Lois Lerner, the director of the exempt organizations division at the IRS responsible for approving tax-exempt organizations.

While no IRS employees have been disciplined for their actions, one employee has been promoted, Issa said. He also said Lerner provided false or misleading information in written responses last year when asked about the targeting of conservative groups by IRS officials.

“It is imperative that IRS provide full and complete information to Congress and the American people about the development of the agency’s plan to single out conservative groups, the revisions of its plan over time and the methods IRS employed to implement its plan,” Issa wrote.

Lerner apologized for the IRS at an American Bar Association conference Friday, calling the actions by IRS employees “inappropriate.”

President Obama said in a news conference Monday that the IRS must be held accountable for its actions and must be fixed to prevent those problems in the future.

“If you’ve got the IRS operating in anything less than a neutral and nonpartisan way, then that is outrageous; it is contrary to our traditions,” Obama said.